What Determines IMF Arrangements

At any one time, some of its member countries will have arrangements with the IMF and others will not. What determines the pattern of arrangements? This is an important question for a number of reasons. Not least, by understanding the circumstances under which countries enter into arrangements it may be possible to redesign IMF conditionality and financing as well as the structure of the IMF’s lending windows in ways that allow them to graduate from the Fund. Large sample econometric research has helped to identify potentially relevant economic, political and institutional factors but has had strictly limited success in providing an overall explanation of IMF arrangements. This paper examines various political economy influences on arrangements from both the side of the governments that demand them and the IMF that supplies them. It offers a conceptual schema within which the determinants of IMF arrangements may be examined, but argues that it is misguided to search for a model that applies universally. IMF arrangements occur under different scenarios. The challenge is to delineate what these most commonly are.